While homeowners across the country continue to increase their property values and build equity in the years following the housing market crash, lack of supply and subsequent bidding wars are both heavily impacting the entry-level market, according to FNC’s report on housing market trends.
Price recovery since 2012 has been apparent in markets like San Francisco, where home prices were 73.3 percent higher in March this year compared to January 2012. In Miami, prices were 60.1 percent higher.
Los Angeles was just shy of 50 percent price recovery in the last four plus years.
Chicago, on the other hand, fell below the national average of 29.3 percent with 18.6 percent recovery. New York City only grew 12.3 percent, proving the Big Apple is more dynamic than pricey Manhattan and parts of Brooklyn.
FNC says first-time buyers are going to struggle the most in areas with high job growth and housing recovery, like the West Coast. But in the Midwest, where recovery is mediocre by compairison, they might have a better shot at finding an entry-level home without heavy competition driving up the initial asking price.
Why are starter homes boosting in price?
Starter homes — homes with sale prices in the bottom 30th price distribution — were up 6 percent nationally from a year ago in March. First-time buyers paid $137,000.
Comparatively, the median price on all homes rose 4.3 percent to $220,000 in the same time frame. In the past 18 months, starter home prices have been growing more than 1.5 percent faster than the rest of the market.
Spring is known as an eventful home buying season, and inventory shortage is not unusual. Bidding wars aren’t rare these days, either, much to buyers’ dismay. Supply has been an ongoing issue for the past three years, and now there seem to be more entry-level homeowners entering the market.
The National Association of Realtors says that the first-time homebuyer share traditionally makes up less than one-third of the market but now makes up around 30 percent of all buyers.
Home price appreciation
The national average home price in April grew to $231,000, an increase of 7.4 percent from last year. FNC predicts spring and summer will be the first time home prices will be above 2006 and 2007, when the housing market was at its peak.
Don’t let those words scare you. After double-digit growth in 2012 and 2013, price appreciation slowed and is currently at a more manageable rate of 5 to 6 percent per year, according to FNC.
